Bitcoin is an Element
Have you heard cryptocurrency is worthless — again?
In 12 months, BTC has shed 40% of its value, shaving $22,000 off the price of a coin. As of this writing, the currency’s market cap has dipped below $700B, or 6% gold’s $12T cap.
If that’s not enough to take the air out of the room, the sages at WSJ recently went viral, claiming that NFTs have flatlined.
Let’s pull the camera back on the scene.
Yes, revolts, uprisings, and civil conflicts have occurred, but Europe has not seen a war on the scale of the Russia-Ukraine conflict in 80 years. The United States has not experienced an inflationary environment of this order in 40 years. The world has not experienced a pandemic like CV-19 in 100 years. The pandemic’s echoing repercussions continue to snarl supply-chains while exacting a deadly toll on under-vaccinated populations of the world.
All in tow, asset holders of any kind now face 6 to 8 weeks of psychological torture followed by a months-long tepid-to-bear market. Will we see a full-blown recession? To that, our Nobel Prize-winning economist of record has this to say: 🤷🏻♂️
Against the economic backdrop, Bitcoin warps, rises, falls, but never disappears. How does it weather these storms? For the same reason lightning can’t destroy quartz. Bitcoin is an element, though not the kind we grew up reading about in science class.
The element’s role in transferring value
Think about spending money when you were a kid. How did you do it?
In the United States, financial institutions cannot authorize credit-card users under the age of 13, and can’t directly issue a card until a user is 18. Up until then, you transfer value solely through paper and coins.
It’s an old-school process. About 2600 years old, actually. The first society we know of where gold was used to store and transfer value was in Lydia, which today is Turkey, in about 600 BCE.
Nowadays, we consider gold to be an element, distinct from other elements because of its 79-proton atomic nucleus. Did they know that back then? No, but they knew it was shiny and malleable.
This concept—that value should be transferred from person to person through a symbol that’s form is derived from the physical world—has been an aspect of humanity for three millennia.
We order the the world through three classifications of matter: elements, compounds, and mixtures. The quarter you popped in the soda machine is nickel and copper. The 5-dollar bill you used to buy a cup of coffee is a compound, mostly wood and grass. Your credit card is plastic—processed crude oil and gas. (Your phone or smart watch now even have digital-visual representations of them.)
Whether by coin, or by bank note, or by chip and pin, all transfers of value from tie back to a cosmic-native element, of some form, in some state. All except Bitcoin.
The first human-native element
If you don’t know the story by now, it goes something like this: All digital currencies in the 80s and 90s were doomed to the double-spending problem.
Around 1991, Stuart Haber and Scott Stornetta, frustrated by the lack of authenticity in internet files, invented blockchain to solve the authentication problem by way of timestamps.
Ten years later, Adam Back, frustrated by the volume of junk mail clogging the internet, created the first Proof of Work program. Think Captcha for sending email.
In 2008, an entity of no known origin, frustrated by how the world works in general, combined blockchain with a Proof of Work consensus mechanism to solve the double-spending problem plaguing virtual currencies. Embedded in the process was cryptographic scarcity. The alchemy worked, and, over the past 14 years, Bitcoin has sparked transformations in finance, internet development, culture, and society.
Each of the 118 elements we have identified through chemistry are cosmic, or, said another way, not invented by humans. What makes an element an element is that it cannot be reduced—it’s essentially uneditable, though it can be added to and mixed and compounded.
This quality shares a striking similarity to the Bitcoin ledger, which can be added to but not edited. As more blockchains and coins and protocols emerge, they will pile onto Bitcoin, not burying it, but sedimenting it. Even though Bitcoin is not from the world, it will remain a part of it.
Bitcoin’s existence, and dare I say permanence, enticingly begs another important question: What human-native element will come next?
